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NAFTA - Chapter 11 - Investment

Cases Filed Against the Government of Canada

AbitibiBowater Inc. v. Government of Canada

Claimant

AbitibiBowater Inc. (“AbitibiBowater”) is a company incorporated in the State of Delaware in the United States, with its headquarters and executive offices located in Montréal, Québec. The Claimant operated a newsprint mill in Grand Falls-Windsor, in Newfoundland and Labrador. It also operated hydroelectric facilities that generate power for the mill and that sells excess power to the provincial utility company, Nalcor Energy.

Articles

1102 (National Treatment)

1103 (Most-Favoured Nation Treatment)

1105 (Minimum Standard of Treatment)

1110 (Expropriation)

Damages claimed

$500 million CAD.

Arbitration Rules

UNCITRAL

Summary

Procedural history

AbitibiBowater served a Notice of Intent to Submit a Claim to Arbitration on April 23, 2009 on the Government of Canada. On February 25, 2010, the Claimant served a Notice of Arbitration and Statement of Claim alleging breaches of Canada’s obligations under NAFTA Chapter 11 and seeking damages of no less than $500 million CAD. On December 15, 2010, further to a settlement agreement reached between the disputing parties, the tribunal issued a consent award terminating the arbitration.

Factual overview and nature of the claim

The Claimant owned several assets in Newfoundland and Labrador including properties (such as timber mills and hydroelectric generation facilities) and vested rights and entitlements (such as water use rights and timber licences).

In the fall of 2008, faced with operational and financial difficulties, AbitibiBowater undertook an action plan to cut costs and restructure the company. The plan involved the closing of several mills resulting in the layoff of many foresters and mill workers. On December 4, 2008, AbitibiBowater announced that it would close Grand Falls Mill, its last remaining active mill in Newfoundland and Labrador, by the end of March 2009.

In reaction to that announcement, the Newfoundland and Labrador legislature enacted, on December 16, 2008, the Abitibi-Consolidated Rights and Assets Act which, according to the claimant, cancelled AbitibiBowater’s extensive forestry and water rights in Newfoundland and Labrador and expropriated the company’s related hydro-electric generation facilities. The legislation, again according to the claimant, foreclosed recourse to Canadian courts and provided for compensation subject to the discretionary power of the provincial government.

The settlement agreement

On August 24, 2010, the disputing parties signed a settlement agreement. Pursuant to the settlement agreement, Canada agreed to pay $130 million CAD in exchange for the withdrawal of the Notice of Arbitration and a full and final release of all AbitibiBowater’s claims.

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